Kaizen in the Office Environment

Kaizen in the Office Environment Guest was Mike Osterling at Osterling Consulting

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Osterling Consulting was founded by Mike Osterling in 2000 with the purpose of supporting organizations on their continuous improvement journey. Building upon 18 years of internal experience in operations leadership roles, Mike has worked full time for the last 13 years applying the lean concepts in manufacturing and office environments. Our team of associates come from a variety of industries; manufacturing and non-manufacturing alike.

Osterling Consulting’s mission is to support our clients by putting in place the foundations required for a self-sustaining culture of operational excellence. We have extensive experience working at all levels of the organization. Our engagements typically combine a mix of consulting, mentoring, training, event facilitation and team support; all with a strong emphasis on learning-by-doing. As opposed to a “one size fits all” approach, we believe our ability to adapt to the unique nature of each client’s needs and environment has been the key to our successes.

Mike Osterling is the President and Principal Consultant at Osterling Consulting, Inc. With more than 25 years of leadership experience in the US, Mexico and Europe, he has played a pivotal role in leading Lean transformations across a broad range of clients and industries including manufacturing, service, oil production, pharmaceuticals and construction. Prior to consulting, Mike worked at Square D Company for 18 years and played a key role in the Lean transformation at several their plants. In 1999 he helped found San Diego State University’s Lean Enterprise Certificate Program and continues to teach in that program. In his Lean career Mike has delivered more than 900 days of training and certified more than 1000 students on Lean Enterprise principles and tools.

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Joe Dager: Participating in the program today is Mike Osterling, the president of Osterling Consulting, a firm that leads organizations on their lean journey. Mike has played a pivotal role in leading lean transformations across a broad range of industries. Mike is an expert at White-Collar Kaizen. Mike, would you start by just telling us about Osterling Consulting and what White-Collar Kaizen is?

Mike Osterling: Sure, Joe. Thanks for having me. Osterling Consulting, I am an independent consultant; I have been doing this since about 2000. Most of the work that we do with clients is focused on improving performance and effectiveness. It's based on the Toyota production system and the Lean Enterprise principles. I have done work extensively in the US, Mexico, and Europe. White-Collar Kaizen has taken these concepts that we have seen and used and that we played with and worked with and improved upon in the production floor, and taking that improvement tactic -- it's strategic, of course, but it’s more of a tactic -- and applying that tactic off of the shop floor. That may be in a manufacturing company in the support areas, or it may be in a completely unrelated industry in the manufacturing.

Joe: You started with Square D and in the manufacturing area?

Mike: Yes, that's correct. I worked with the Square D Company for about 18 years, in a bunch of different roles, in a variety of plants. I was in production control. I was in materials management and planning. Most of my time was in manufacturing management, as a manufacturing manager. The last six years, I was a continuous improvement manager.

Joe: What compelled you to apply these principles from the shop floor into the office environment?

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Mike: It's an interesting journey, Joe, as all of our journeys are. We got introduced to the concept in the mid-to-late 90's, and we started by doing Kaizen Events and creating flow and putting Kanbans, all of these traditional Toyota, or lean tools, in place in the production areas. This was a big facility where I spend most of my time, we had about 1500 people and we had a plan which included: How are we going to role this out into the different areas of the operation? But most of it was focused on production. We saw a kind of high impact results by doing these Kaizen Events, not just in improving the delivery of products to our customers and reducing lead times and improving flow, but also in changing the way that people were thinking.

It wasn't long until we saw the connection between the performance of our support area, whether it be engineering or human resources or our export group, or whatever it might be, it wasn't long before we saw that connection in how those groups were performing and how our production folks could effectively deliver value to our customers.

So in order to realize meaningful and impactful improvements on the shop floor, we needed to bring these other functions and the support folks into the fold. So for instance: 1. How long did it take to update procedures?

2. How long did it take to get engineering change requests through the system?

3. If I needed to buy some special tools or fixtures or jigs or something like that, what was the process and how much time was required to get all of that done?

4. How long does it take to get new hires on board?

All of these things quickly came to surface as barriers to flow and barriers to realizing significant improvements on the shop floor.

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So we took a couple steps back and we said, "All right, we got to expand this. We got to get off the shop floor," and used a tool called "the strategy development" or Hoshin Kanri, to start looking at things not just from an operations perspective, but from an overall performance perspective, to see what were the things that were necessary to focus on, in order to support the delivery of products to our customers.

Joe: When I look at it, in a service and in an office environment, that the process is 80 percent and the actual doing of something is 20 percent most of the time. Can you give me some real life examples of how you correct some of these types of things, the Order flow or Engineering? I mean some of the obvious things that you have seen that stand out to you.

Mike: It's all about understanding and being able to see what these unnecessary activities are that are going on. You know, what's the waste and how is the process designed? What I have come to discover, or what I have come to recognize, I should say, is that most of our processes have kind of been cobbled together over time. As new requirements are placed upon us by a customer, they are probably legitimate requirements if the customer is asking for it, what we typically do is we patch that on to an existing process, instead of taking it back to, I will say, ground zero, and starting from scratch. Just a few weeks ago, we were looking at an order fulfillment process. From the time a customer submitted a request for a product, until that product was actually shipped and out the door. We ignored the production piece. We were just looking at the transactions. I received an order. What are the all the things that we need to do in order to communicate the customer requirements to the shop floor? What are all those steps and transactions? And then we, again, bring out the production piece, or left that out.

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And then, from the time the product was produced: What was required in order to get it shipped and then invoiced? And the things that we saw, some of them were comical, I will say. The number of times that the folks were: Stapling documents together, Unstapling Resorting, Filing, and Un-filing.

At the end of the day, it was a great exploratory activity and we did this inside a Kazien Event. We had this packet of documents. There were seven documents, all stapled together, that went down to the accounts receivable folks to actually send the invoice out to the customer. And we took this packet of documents and we gave it to the lady in the accounts receivable group, and we said, "OK. Of all of these documents, which of these do you need in order to do your job?" And she thumbed through the whole package and she looked at the one on top and she goes: "This one. And that's it, it's the invoice. I don't need the work order. I don't need the bill of lading. I don't need the packing list. I don't need the request for schedule. I don't need all these other things.“ So that's an actual one where it was actually easy to identify.

Joe: I can remember one time, in one of my experiences, is that we found out that...we went in and there were six or seven items on a large order, that really required long time delivery, required extra time by the vendors to be able to supply to us where they had to give us documents to sign off. So when we received an order, those six or seven became a priority, and we really had two or three weeks to do the other paperwork. We were able to supply that information out to the vendors, get it signed off and increase the time for production because of this. All this was done, by addressing the handling of six or seven items being ordered early in the process rather than waiting for the whole job to be complete.

You are very experienced in Kaizen and that's a lot of the workshops you hold, what should be your expectations in holding a Kaizen Event?

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Mike: It's to help people through the improvement process. What we see in office environments quite often -not always. But quite often, is that people don't have a lot of experience with process improvement. They don't have the experience with continuous improvement tools, and many folks don't really understand why it is important that the new higher process be improved, or the purchase requisition process be performed faster. The primary objective out of a Kaizen Event is to educate people, to enlighten people to the opportunities, and to help or facilitate them through an improvement activity. Ideally, what we are trying to do is get the organization to think about fixing problems every day. If people don't how to do that, and we just ask them, "Go out and fix a process," it's hard for them to understand what tools are, what the methodologies to realize process improvements are.

Kaizen Events, in my opinion, are a great foundational activity for getting people to think about small incremental day-to-day changes, a great foundational activity for people to do problem solving on their own.

Joe: When getting a team involved in the Kaizen Event from different areas of the company, how do you know you get the right team?

Mike: There is a lot of work that's related in scoping a Kaizen Event, especially in a non-manufacturing process: Office administrative and Technical type environments. What we see are that most or many of the processes are very cross functional. In order to improve a process of that nature, we need to make sure we understand: 1. What are the different functions that touch this process?

2. Who are the customers: internal or external customers?

3. Who are the suppliers: internal or external suppliers?

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And then based on who is involved in the process, we try to get representation from those different groups, representation on the Kaizen team.

Joe: When you hold a Kaizen Event do you include, process mapping and value stream mapping, and a lot of the different lean tools that we are familiar with?

Mike: Value stream mapping is typically one, we don't do inside a Kaizen Event because, in most cases, the value stream maps are what are driving the improvement activity. So the value stream maps are strategic in nature and, within the Kaizen Event or, I will say, the Kaizen Event is a tactical activity. So the value stream map tells us what we should be working on. Once we get into a Kaizen Event, a lot of the traditional tools are used. We did a Kaizen Event on preparing the annual business plan. So takt time wasn't really relevant. Takt time would have been 250 days. So takt time wasn't really relevant.

Process mapping at a detailed level: we do a form of swim-lane process mapping, where we integrate process time and lead times and, a quality metric, that's referred to as percent complete and accurate. It's a very, very powerful tool for visualizing process flow. Where the time disconnects are? Where the quality disconnects are? I would estimate that two-thirds or three-fourths of my Kaizen Events in office environments utilize the swim-lane or metrics based process maps.

The other tool that we see and use a lot on the shop floor, that we also use for administrative processes, are the basic problem solving root cause analysis tool: fish bone diagrams, Pareto analysis, check sheets, and brain storming. In office environments, those are probably the most predominant tools we use inside a Kaizen Event.

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Joe: The eight primary types of waste, do look for the same thing in an office environment that you do in a shop environment? Or, are they different?

Mike: They are the same, but they look different. In fact, they are even harder to see.

When you talk about learning to see on the shop floor and how do you identify and how do you see over production in an office environment. We can see our over production on the shop floor. It's accumulations of work in process. It’s a lot of finished goods. But in an office environment many of those wastes are hidden inside our computers, or they are just stacks of paper in an inbox. The easiest way to see it is viewing the time that it takes to get things through the process from beginning to end. So the same eight wastes are there. The relevance of each of those wastes may not be the same for every office environment, but they're all there.

Joe: You are still concentrating on achieving flow in an office environment?

Mike: Flow is the objective. It's extremely difficult in low volume, high mix environments. Just like flow can be difficult to achieve in a job shop when that's one of our objectives, but we can't always see it or we can't always realize it, because, in a job shop, we have got a lot of shared resources. We may have one lathe that supports 10 different product families, and so we are not going to be able...or, it may be very difficult to achieve flow for all 10 of those product families. We see the same thing in an office environment. There's a lot of multitasking on lower volume administrative processes.

People have multiple customers, and the volume for one process may not be enough to justify dedicating a person or people to that process.

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So we are trying to achieve flow, and we may not get our lead time down to process time through a series of Kaizen Events, but we should definitely be able to reduce our lead time and get closer to process time.

Joe: If I am an Engineering manager, and I have three or four engineers working for me. What would lead me to think that lean could be applied to my situation? How do you get me to buy into it?

Mike: When we go into office environments, there's resistance. Just like there are in shop floors, when we suggest that we want to do something differently, run a process differently. It's common for the people's first reaction to be defensive and to resist the change. I am a big believer that 99 percent of the time when we make these types of improvements, it's about work simplification. It's not about getting people to do their job faster. It's not about working harder. It's about freeing up capacity and stop doing the silly stuff that we have been doing for whatever reason.

The best way to demonstrate, or to sell people on this, is to pick a relatively easy process. It might be painful, it might be somewhat high profile and go in and get a small team to work on improving that process. Do a mini-Kaizen Event. Do an one- or a two day event and see some results, because, as we all know, success breeds more success.

Joe: How do you pick out a project? I mean if you are sitting there and..."OK, we want a little project, we want all the right things in place for us to be able to be successful to get a buy in." But if you do that, we already probably know the answers that we need to improve that area. This is like low hanging fruit.

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Mike: It is low hanging fruit. But if nobody has looked at it, if we have been running that process the same way that it's been run for the last 10 years, then its low hanging fruit, but nobody is picking it. It is the way to get people off center. It is how we pick a project. At the early stages, my primary objective is to sell people on the fact that we can, without a whole lot of pain, improve the process.

So again, I am going to pick something that's small, pick something that's a guaranteed success. Pick something that might be a bit painful, but that, we feel like we can have some pretty high impact on in a short period of time.

The risk of picking low hanging fruit and having that be our overall strategy is that it may not really connect to improving service to our external customer, or it may not have a big impact on improving internal capacities so we can work on the things that are important.

Yes, at the beginning it is low hanging fruit, but pretty soon, we need to make sure that our improvement activities are tied to our strategic objectives.

Joe: You are the co-author of "The Kaizen Event Planner". What did you try to accomplish with that book?

Mike: What we tried to accomplish with that book, Karen Martin and I put the book together. We published it through Productivity Press, and it came out about two years ago. What we are trying to accomplish with that book was to actually document what the standard work was in pulling off a successful office based Kaizen Event. It was a real journey. It was a fantastically educational and enlightening one for me. So, what Karen and I were trying to do in putting together the book was document what the standard work was in putting together Kaizens, successful Kaizen Events. What we've realized was, as we were training people to facilitate Kaizen Events, there are so many things

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that we wanted to say but we didn't have a script. So, the book was really a script from the beginning to the planning phase through the execution and probably most importantly, through the sustaining faith what's required to pull off an event. We wanted to share that with people.

Joe: Can people do it the first time by just reading a book? Or do they need to experience a Kaizen Event, have some experience behind it?

Mike: Well, it depends how successful you want to be. The first Kaizen Event I did back in the '90s, I'd read some books, I'd talked to some people, and we did an event. I learned a whole lot, and, probably, learned more than we improved during that event, but we ended up making significant improvements to a process. Was that event as effective as it could have been? Heavens, no. So, reading a book gives you a good orientation, there's nothing better than living a Kaizen Event. As you go through a Kaizen Event, there's so many things that you see. There's so many things that you can't write down. It's emotional, it's iterative, and it’s kind of intuitive. You can't have a checklist that addresses everything that might happen inside a Kaizen Event. So, participating on a team is fantastic and there's no substitute for it. Participating on a team and having a checklist or having a guidebook in your hand is also a pretty good way to prepare for a Kaizen Event. I think, one of the most important things to do is to co-facilitate an event with an experienced facilitator before you facilitate one on your own.

Joe: Now, do you do like the PDCA-type [plan-do-check-act] process in the Kaizen Event? Is that how it is structured?

Mike: Yes, we do a PDCA. The thought process has to be there, and I like to think of there as being a mini PDCA and a macro PDCA. The macro PDCA includes the preparation

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for the event and it includes the execution of the event. It includes the follow-up, the sustainability, and the checking on how effective the event was. That's the macro PDCA. The micro or the mini PDCA, actually, happens within the context of the event. So, at the front end of the event, the planning, we're trying to understand the current state of the process, how it's performing, where the disconnects are. The doing is related to running experiments and seeing how that performs, and that, of course, it includes the checking.

Then the acting is deciding on what our final process design will be, training people on the new process, and rolling that process out.

Joe: You took the Kaizen Event Planner and then, shortly after, you came out with another book that was Metrics Based Process Mapping. What led you to do that?

Mike: So, the Metrics Based Process Mapping is, actually, an Excel-based tool. Within the book, the Kaizen Event Planner, we dedicate a whole chapter and then some to this tool, Metrics Based Process Mapping. These are the swim-lanes that have the key time metrics and quality metrics associated with each step in the process. A lot of people put together value stream maps, sometimes they end up on butcher paper with post-its.

Then, after the value stream mapping activity, we roll these things up and they sit in a corner of an office. There are some good tools out there to capture value stream maps electronically. We don't develop them electronically, but we capture them and then we archive them electronically. So, we can share them between locations, we can distribute them to different people, and so we've got a memory of what happened. We were having the same problem with these swim-lanes of metrics based process maps. Metrics based process maps, we use them to document what the current state at a detail level. What could it be, what's the future state, and of course, that drives our implementation plan or our action items to accomplish the future state.

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But, what we ended up seeing was, our current state maps and our future state maps were getting rolled up and stock in the corner of an office and nobody had access to them. So, the metrics based process mapping tool, or the Excel tool, is something that folks can use to archive what was documented during the Kaizen Event. We, typically, archive it after the event. We don't want a bunch of people looking at a screen as we're designing or documenting a process flow.

Joe: Is there anything you'd like to add and tell someone about if they're thinking about a Kaizen Event?

Mike: I think, it's important that people recognize that office events, white collar events, we’re trying to achieve the same thing as we're doing out in a fabrication or a shop floor type environment, but there are a lot of differences. The people are different, the organizational structure is different, the product is different because we can't even see it. The process is very disjointed and there's lots of hand off, there's a lot of people that are included in the process versus a lot of our manufacturing processes. We don't really have a culture of measurement or performance management at a process level for our white collar type activities. So, our objectives are the same, we use a lot of the same tools, but we've got to adapt them. Environment is different, and we really need to take those things into account, especially, when we're planning the events.

Communication is critical; we've got to get all the stakeholders involved early on. We've got to make sure that those people are involved within the event. We need leadership.

It's interesting, if we look at our office type processes, they're really a mixture of policies and procedures. The people on the team can change the procedures, they can improve

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the procedures. But, quite often, policies get in the way of realizing true impactful change.

So, the people on the team don't have permission to change policies, but we need to keep the leadership team engaged during the event, and make them aware which policies are getting in our way. Hopefully, they'll be of a mind to quickly modify some of the policies to enable the team to realize their full success.

Joe: Why have you chosen to continue on with Lean even though you have Six Sigma in your background?

Mike: I look at Lean and Six Sigma as being complimentary tools. There are a lot of improvement activities or improvement opportunities out there that are best dealt with from a Six Sigma perspective. We've got a lot of data to analyze. We've got to put in place a new system or something like that. But there are also a lot of opportunities out there that are best suited to a Lean approach. When we look at office processes, I feel that most of the variation, most of the opportunities, most of the complexities is people related or processes that are executed by people related. My belief is that the best way to address process issues and processes that are run by people issues is by getting the people involved in improving those activities. The best way to get people inclusion is by using the Lean tools.

Joe: So, you believe that the Lean tools make it easier for someone to develop a Lean culture?

Mike: Absolutely. I think the Lean tools are the best way for an organization to develop a continuous improvement culture. Lean tools, I think, are more intuitive, they're easier

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to learn. It's a lot easier to teach a lot of people and include a lot of people in the improvement process by using the Lean tools. Six Sigma is important, it's critical for an organization to understand how Six Sigma works, which tools are appropriate for which type of problem. But, let's make sure we're using the right tool for each type of problem we have.

Joe: Well again, Mike, I'd like to thank you very much for participating in the podcast today. The podcast will be up on the Business901 site. It'll also be in the Business901 iTunes store.

Mike: Thanks for the opportunity, Joe.

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Joseph T. Dager Lean Six Sigma Black Belt

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Email: jtdager@business901.com Web/Blog: http://www.business901.com Twitter: @business901 What others say: In the past 20 years, Joe and I have collaborated on many difficult issues. Joe's ability to combine his expertise with "out of the box" thinking is unsurpassed. He has always delivered quickly, cost effectively and with ingenuity. A brilliant mind that is always a pleasure to work with." James R.

Joe Dager is President of Business901, a progressive company providing direction in areas such as Lean Marketing, Product Marketing, Product Launches and Re-Launches. As a Lean Six Sigma Black Belt, Business901 provides and implements marketing, project and performance planning methodologies in small businesses. The simplicity of a single flexible model will create clarity for your staff and as a result better execution. My goal is to allow you spend your time on the need versus the plan.

An example of how we may work: Business901 could start with a consulting style utilizing an individual from your organization or a virtual assistance that is well versed in our principles. We have capabilities to plug virtually any marketing function into your process immediately. As proficiencies develop, Business901 moves into a coach’s role supporting the process as needed. The goal of implementing a system is that the processes will become a habit and not an event. Part of your marketing strategy is to learn and implement these tools.

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